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Today's Paper | December 14, 2024

Published 15 Mar, 2008 12:00am

Palm oil 3 per cent lower

KUALA LUMPUR, March 14: Malaysian palm oil futures ended nearly 3 per cent lower on Friday as investors booked profits while waiting to see if China would import more vegetable oils to arrest inflation, traders said.

Although most US soyaoil futures reversed gains in late Asian trading and crude oil market fell slightly from a record $110 a barrel hit overnight, market sentiment was still buoyant on expectations of higher palm oil shipments.

The benchmark May contract on the Bursa Malaysia Derivatives Exchange settled down 112 ringgit to 3,686 ringgit ($1,166) a ton, after going as low as 3,670 ringgit per ton.

Investors are taking the palm oil market lower to lure in Chinese buyers. With China in the market now, this is bound to result in higher exports numbers, said a trader with a foreign brokerage in the Malaysian capital.

And exports of Malaysian palm oil products have already been rising, with cargo surveyors reporting increases of up to 54 per cent to more than 520,000 tons for March 1-10.

Traders expect shipments for the first 15 days of March to rise roughly 9 per cent to 657,000 tons from around 600,000 in Feb. 1-15.

One surveyor, Intertek Testing Services will release its estimates for March 1-15 over the weekend while Societe Generale de Surveillance is expected to announce its forecasts on Monday.

Analysts say food demand for palm oil has replaced soyoil,which has been diverted into biodiesel sector as crude oil prices break successive records.

There is increased supplies of palm oil (in Malaysia) compared to last year, when supplies were tight, said Ben Santoso, Singapore-based analyst with DBS Bank.

And bio-ethanol has become more attractive as crude oil prices go higher, which has increased palm oil’s substitution effect on soyaoil.

In Malaysia’s physical market, crude palm oil for March shipment in the southern region were quoted at 3,660/3,710 ringgit a ton. Trades were done between 3,710 and 3,730 ringgit.

—Reuters

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